Housing Bubble or Recession? You Might Have to Pick One

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Posted To: MND NewsWire

There are two conflicting theories on how or even if monetary policy should play a role in stabilizing asset price booms and busts. If central banks use interest rate hikes sufficient to curb leverage and curb booms it might also boost unemployment and lower inflation, deviating from the central bank's goals of full employment and price stability. The alternative is to concentrate on those dual goals and allow financial regulation and supervision to deal separately with threats to financial stability. A new Economic Letter, Interest Rates and House Prices: Pill or Poison? from the Federal Reserve Bank of San Francisco and written by Òscar Jordà, vice president in the banks Economic Research Department, Moritz Schularick, and Alan M. Taylor professors of economics at the University...(read more)

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Source: http://www.mortgagenewsdaily.com/08032015_fed_monetary_policy.asp

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